Here's How OJK Increases Community Trust In The Insurance Industry

Insurance illustration (Photo: dock. unsplash)

JAKARTA - The Financial Services Authority (OJK) collaborated with the insurance association to launch a Roadmap for Strengthening and Development of the Insurance Sector 2023-2027 to restore public trust in the insurance industry in Indonesia.

The Chief Executive of the Insurance, Guarantee and OJK Pension Fund, Ogi Prastomiyono, said that the launch of the Insurance Sector Strengthening and Development Roadmap is one of the commitments to improve the insurance industry and hopes that with this step, public trust can increase.

Ogi said that in recent times, public trust in the insurance industry has decreased due to the large number of cases in the insurance industry.

"We have a commitment to how to restore public trust in the insurance industry. Therefore, we use the tagline'restoring confidence through industrial reform'. And we do this together. Not only OJK but all stakeholders," said Ogi, at a press conference, Monday, October 23.

According to Ogi, based on survey data in 2022, Indonesia's financial inclusion rate is only 16 percent in Indonesia that buys insurance products. Meanwhile, insurance literacy is about 2 times that it reaches 33 percent.

"So only half of people understand insurance, buy insurance products. That means there is no trust in the insurance products offered. This is a good momentum to restore public confidence and trust," he said.

Ogi said that his party had taken firm steps to take action against insurance companies that had problems or did not carry out their duties according to the provisions, harmed policyholders and did not meet good financial indicators, governance, and risk management.

"As well as preparing a better insurance industry in the future and having made adjustments to changes to regulations, starting with the Unit Link product, the provisions for derivatives of the Financial Sector Development and Strengthening (P2SK Law)," he said.

Ogi conveyed that the roadmap or roadmap is in line with the PPSK Law (UU) which encourages the strengthening of supervision and insurance regulations.

"From the PPSK Law alone in 2023, OJK is preparing 9 POJK related to insurance, namely 4 POJK that have been issued and 5 are being prepared and hopefully it will be completed before 2023. And in 2024 there will be a derivative POJK," he said.

In addition, in order to ensure that regulations remain in line with roadmaps, the OJK has created a task force or task force that is used to review and evaluate the realization of the Roadmap for Strengthening and Development of the Insurance Industry 2023-2027 so that the insurance industry is stronger, healthier and sustainable.

Ogi hopes that through the insurance regulation and roadmap which includes this vision for the next five years, the insurance industry can be healthier. Especially, in terms of strengthening capital, governance, risk management, product management and also supporting professional services in the insurance industry.

Then in the context of developing the insurance sector, there are three layers of supervision that include first internal strengthening of the insurance sector. The second is the strengthening of professions and supporting institutions. And the third is strengthening the role of the OJK as a regulator.

Similarly, the Chairman of the OJK Board of Commissioners, Mahendra Siregar, said that in the process ahead, the OJK will form a task force that functions to monitor the implementation of the Roadmap for the Development and Strengthening of the Insurance Industry for the 2023-2027 Period.

"After forming a task force, monitor the implementation and report it to stakeholder progress report," he said.

In addition, the launch of the Insurance Industry Development and Strengthening Roadmap for the 2023-2027 Period is also to encourage the ratio of Insurance penetration in Indonesia to increase, because currently the insurance penetration ratio is still at the level of 2.75 percent.

Mahendra said that currently the penetration of insurance or insurance industry funds compared to Gross Domestic Product (GDP), in Indonesia, is still relatively small, only 2.75 percent.

Thus, according to him, there are around 7.5 million people out of a total of 275 million Indonesians. In fact, the contribution to the Indonesian economy is still very small.

"We are talking about small assets to GDP. The penetration of 2.75 percent is said to mean around 7.5 million people out of 275 million people (residents)," he said.

Thus, Mahendra assessed that there is still very large room for the development of the insurance industry, considering that Indonesia's economic growth is consistent at 5 percent, so that public interest in using insurance is still wide open.

"It's not a bad problem, it's a good problem because the repair space is enormous and the potential can be said to be unlimited. I think the limit is again how soon and how strong to regain confidence to see the potential market, age, per capita income, insurance needs, everything is in front of our eyes. The only challenge how to regain confidence," he said.